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Small talk and theory of mind in strategic decision-making

Bose, Neha and Sgroi, Daniel
(2019)
Small talk and theory of mind in strategic decision-making.
Working Paper.
Coventry:
University of Warwick. Department of Economics.
Warwick economics research papers series (WERPS)
(1191).
(Unpublished)

Abstract

In a laboratory experiment, 338 participants were asked to communicate in pairs and then play two games with their partners: the 11-20 money request game (a tool for assessing level-k reasoning) and a public goods game. The communication occurred prior to any knowledge of what was to follow but played an important role in allowing them to develop theories or mental models of their partners (\theory of mind") which proved to be crucial explanatory factors for decision-making. We examine the players' beliefs about the personality and intelligence of their partner, how they play in the games and analysed the language used during communication. The results indicate that beliefs about partner's type is biased by own-type. In particular, extraverts, characterised by positive a ect, projected their positivity onto their partners. The level-k strategy chosen in the 11-20 game increased with the perceived similarity between players and in the public goods game, players cooperated more when they believed their partners to be extraverted. An analysis of the text used during communication explains how it was possible for participants to draw inferences about other's type: for instance, use of more words and more dominant words were associated with being an extravert.